Monday, November 11, 2013

One Man's Ceiling is Another Man's Floor

Despite the headlines of gold and silver each respectively loosing 2.0% and 1.65% last week, our reflationary measure found with the silver:gold ratio managed to squeak out another positive weekly close. 

The performance divergence between equities and the ratio that began in March appears in hindsight as an artifact of the equity markets upside break of the Meridian ceiling that occurred as well that month.   
Until we see conditions and relationships change, we expect that both the ratio and the equity markets will continue trending higher over time. 
Both the miners and the banks displayed notable outperformance last week. While it has been a long time since both groups have trended higher together, we expect to find this performance dynamic more often going forward. 
As expected, higher beta indexes such as the RUT and the Nasdaq have taken a breather (relative to the SPX) this quarter.
Based on our historic momentum comparative with oil (which arguably has been one of the more accurate guides for appraising Apple over the past year) - the next leg higher for the stock will begin towards the end of the quarter and close the year on a high note. 
Picking up where we left off on Friday, the apartment house rules of the euro/dollar exchange rate would imply that another bout of deflationary concerns in Europe may translate stateside in the US to a weaker dollar and downstream with higher commodity prices.

While more than just a semantic debate and certainly not good inflation per se, in this FX high-rise - one man's ceiling is another man's floor. 
Our biggest short-term concerns remain overseas in Japan and with the yen's potential to dislocate from the relative equilibrium and narrowing range it has traded in over the past six months. 
*  All stock chart data originally sourced and courtesy of 
*  Subsequent overlays and renderings completed by Market Anthropology